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A tidal wave of litigation is catching up to Meta, leading to $42 billion in recent penalties and settlements , a powerful reminder to AI companies that they could face a court reckoning even when regulation lags. Why it matters : AI companies are racing to build better models and autonomous agents, but they don't enjoy the same legal protections that shielded web platforms for decades. The scale of the penalties Meta is facing offers a preview of potential legal exposure . The big picture : For years, Facebook's parent company navigated a seemingly endless string of scandals — weathering allegations of election interference, privacy lapses and platform harms — and was largely protected from severe litigation penalties due to Section 230. The provision — from a historic 1996 law passed as the internet was just beginning to change modern life — protects tech platforms from being sued over content created by their users. Legal experts say that law doesn't apply to AI. Models create their own content, so companies could face traditional product liability and negligence claims. Catch up quick : The two massive rulings highlight how legal risk for tech giants can extend by a decade, or proceed much faster. Meta was just hit with a $25 billion penalty over the Cambridge Analytica scandal after a jury found the company misled users about Facebook's privacy practices. Many details about that event surfaced nearly 10 years ago. The company said it believes it will win an appeal, and legal experts have said the penalty will likely be reduced. In August, the company agreed to a $17 billion settlement with states related to the impact of Meta products such as Instagram on teen mental health. State of play : A key cog in the Trump administration's regulatory efforts is the threat of litigation. Liability is sure to feature prominently in the risks AI giants such as Anthropic and OpenAI spell out to shareholders as they prepare for massive public listings. Anthropic's IPO is expected before Thanksgiving. The companies face an array of legal threats, including harms caused directly by their models, the potential damage from bad actors who use them and copyright matters that remain far from settled. The potential to be hauled into court isn't limited to AI companies; it could also extend to firms that use AI. Yes, but : Big legal penalties take years to arrive, meaning a product can take off and revolutionize the world long before a court determines whether safeguards are adequate. As recent cases have shown, the AI paper trail is extensive, and records of internal warnings, testing and product decisions will shape the findings by judges and juries. Warnings about catastrophe from AI executives will also be ready at hand, and variations on "I told you so" aren't likely to indemnify CEOs. The bottom line : Meta's recent penalty offers a warning to AI companies: legal exposure can build slowly, then become enormous.

Any business in America can be hauled into a New Mexico kangaroo court on some cockamamie theory, with zero evidence anyone ever suffered as a result, and fined more than the value of your entire company — and unable to appeal unless you can cough up even more cash to post bond.

The recent Meta settlement includes a clause banning "cosmetic procedure filters" for teens. But defining what constitutes an extreme makeover isn't easy.

Private plaintiffs' lawyers stand to collect up to $1.27 billion from New Mexico if the state's $25 billion court win against Meta Platforms this week is upheld, according to a Reuters review of a contract with the state.

New Mexico Attorney General Raúl Torrez entered into politics with a 2016 run for district attorney backed by more than $100,000 in spending from a George Soros-funded super PAC.

‘hope Meta sticks to its guns’

A series of lawsuits has created a new de facto regulatory regime as courts order companies like Meta and Google to change their business practices — and pay up.

Plus: Senators probe Google AI in schools and AI finds bug that puts 70% of websites at risk.

The social media giant faces a new class action lawsuit, days after the government said it would take action against the company for failing to comply with safety regulations.

The penalty, one of the largest levied against a tech giant, stemmed from a lawsuit by New Mexico claiming the social media company had misled users about their data privacy.

The penalty in New Mexico stems from a lawsuit about a data privacy scandal that Facebook faced more than eight years ago.

A state jury found the social-media giant liable for misleading the state’s consumers.

The $25 billion penalty comes after jurors found Meta committed more than 43 million violations of New Mexico's consumer protection laws.

A New Mexico judge is ordering Meta to pay a massive $25 billion in penalties on Wednesday, an order that may empower the state’s far-Left attorney general to force the platform to reinstate censorship tools that it did away with after the 2024 election. The case initially targeted Meta, the parent company of Facebook, over ...